United Telephone Long Distance, Inc. v. Nichols

• Citation: 14 Fla. L. Weekly 326,546 So.2d 717
• Decision Date: 06 July 1989
• Docket Number: No. 72988,72988
• Parties: , 14 Fla. L. Weekly 326 UNITED TELEPHONE LONG DISTANCE, INC., and United Telephone Company of Florida, Appellants, v. Katie NICHOLS, etc., et al., Appellees.
• Court: United States State Supreme Court of Florida

Page 717

546 So.2d 717

105 P.U.R.4th 532, 14 Fla. L. Weekly 326

UNITED TELEPHONE LONG DISTANCE, INC., and United Telephone Company of Florida, Appellants, v. Katie NICHOLS, etc., et al., Appellees.

No. 72988.

Supreme Court of Florida.

July 6, 1989.

Julian Clarkson and Michael L. Rosen of Holland & Knight, Tallahassee, and Jerry M. Johns, Altamonte Springs, for appellants.

Susan F. Clark, Gen. Counsel, Florida Public Service Com'n, Tallahassee, for appellees.

Jack Shreve, Public Counsel, and Charles J. Rehwinkel, Associate Public Counsel, Tallahassee, for Citizens of the State of Florida.

OVERTON, Justice.

This cause is before us on appeal from a Public Service Commission ("PSC" or "Commission") order granting the application of United Telephone Long Distance, Inc., for a Certificate of Public Convenience and Necessity to provide long distance telephone service as an interexchange carrier. The Public Service Commission's order required United Telephone Long Distance, Inc., to compensate its parent corporation, United Telephone Company of Florida, for use of its good will and intangible benefits. Both the long distance carrier and its parent challenge the latter compensation requirement. We have jurisdiction, article V, section 3(b)(2), Florida Constitution, and affirm.

The pertinent facts are as follows. United Telephone Long Distance, Inc. (UTLD), is a wholly owned subsidiary of United Telephone Company of Florida (UTF), a local exchange telephone company certificated and regulated by the Public Service Commission (PSC) to provide telecommunication services to all or parts of twenty-four Florida counties. United Telephone of Florida is a subsidiary of United Telecommunications, Inc. (UTI), and another subsidiary of UTI is a fifty percent owner of U.S. Sprint, a national long distance company. These corporate interrelationships raised some unique concerns, the principal one being UTLD's close affiliation, as a wholly owned subsidiary of UTF, with a major local exchange company. The PSC ordered a public hearing because of certain concerns with cost allocation which that relationship presented. As a result, a number of long distance exchange companies, as well as public counsel, intervened to oppose UTLD's application. The Public Service Commission considered numerous issues, but the only issue now before this Court was framed in the following manner:

Should UTLD compensate UTF and its ratepayers for services and tangible and intangible benefits (including, but not limited to, use of UTF's name, logo, good will, information, personnel, facilities and financial resources), if any, UTLD receives from its association with UTF and its ratepayers?

This issue was first raised by public counsel, who was joined by PSC staff and several intervenors who suggested that the failure to compensate for these intangible benefits would give UTLD an unfair competitive advantage and deprive UTF's ratepayers of compensation for a benefit provided. They further asserted that UTF's name, logo, reputation, and heritage "was generated" to a large extent by ratepayers' funds and that UTF and its ratepayers should be compensated for their use. Two other major intangibles besides good will were the ready availability of financing and trained personnel on call from UTF.

UTLD and UTF took the position that it was proper for UTLD to compensate UTF for tangible benefits but no compensation was justified for intangible benefits. The appellants argued that UTF's local ratepayers would be fully compensated by the payment of a premium excess charge and fees for services provided to UTLD under contractual arrangements plus the assigned portion of common cost assets and services shared by the two companies through PSC approved allocations. Appellants adamantly opposed any compensation for use of the United Telephone name, logo, and good will, as well as the intangible benefit provided by the availability of financing and trained personnel. UTF suggested that its good will and reputation and the availability of personnel and...